Friday, December 26, 2008

The Intelligent Investor - "By far the best book on investing ever written." - Warren E. Buffett

This comic describes how Warren Buffett feels when he first read the book "The Intelligent Investor" back then when he was 19 years old. This is his various quotes about the book.

“I went the whole gamut. I collected charts and I read all the technical stuff. I listened to tips. And then I picked up Graham’s The Intelligent Investor . That was like seeing the light .”
(Adam Smith, Supermoney (New York: Random House, 1972),p. 181.)

“I don’t want to sound like a religious fanatic or anything, but it really did get me. ”
(Source: L. J. Davis, “Buffett Takes Stock,” New York Times Magazine ,April 1, 1990, p. 16.)

“Prior to that, I had been investing with my glands instead of my head. ”
(Source: Warren Buffett correspondence to Benjamin Graham, July 17, 1970.)

Here's the Preface written by Warren Buffett on The Intelligent Investor.
I read the first edition of this book early in 1950, when I was nineteen. I thought then that it was by far the best book about investing ever written. I still think it is.

To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions
and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must supply the emotional discipline.

If you follow the behavioral and business principles that Graham advocates—and if you pay special attention to the invaluable advice in Chapters 8 and 20—you will not get a poor result from your investments. (That represents more of an accomplishment than you might think.) Whether you achieve outstanding results will depend on the effort and intellect you apply to your investments, as well as on the amplitudes of stock-market folly that prevail during your investing career. The sillier the market’s behavior, the greater the opportunity for the business-like investor. Follow Graham and you will profit from folly rather than participate in it.

To me, Ben Graham was far more than an author or a teacher. More than any other man except my father, he influenced my life. Shortly after Ben’s death in 1976, I wrote the following short
remembrance about him in the Financial Analysts Journal. As you read the book, I believe you’ll perceive some of the qualities I mentioned in this tribute.

Warren Buffett recommended this book (The Intelligent Investor) so many times, and it's quoted below:

1966 Letters to his Partners in Buffett Partnership
The availability of a quotation for your business interest (stock) should always be an asset to be utilized if desired. If it gets silly enough in either direction, you take advantage of it. Its availability should never be turned into a liability whereby its periodic aberrations in turn formulate your judgments. A marvelous articulation of this idea is contained in chapter two (The Investor and Stock Market Fluctuations) of Benjamin Graham’s "The Intelligent Investor". In my opinion, this chapter has more investment importance than anything else that has been written.

1984 Letters to Berkshire Hathaway shareholders
(In what I think is by far the best book on investing ever written - “The Intelligent Investor”, by Ben Graham - the last section of the last chapter begins with, “Investment is most intelligent when it is most businesslike.” This section is called “A Final Word”, and it is appropriately titled.)

1990 Letters to Berkshire Hathaway shareholders
In the final chapter of The Intelligent Investor Ben Graham forcefully rejected the dagger thesis: "Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety." Forty-two years after reading that, I still think those are the right three words.

1993 Letters to Berkshire Hathaway shareholders
In fact, the true investor welcomes volatility. Ben Graham explained why in Chapter 8 of The Intelligent Investor.

2003 Letters to Berkshire Hathaway shareholders
Jason Zweig last year did a first-class job in revising The Intelligent Investor, my favorite book on investing.

2004 Letters to Berkshire Hathaway shareholders
Some people may look at this table and view it as a list of stocks to be bought and sold based upon chart patterns, brokers’ opinions, or estimates of near-term earnings. Charlie and I ignore such distractions and instead view our holdings as fractional ownerships in businesses. This is an important distinction. Indeed, this thinking has been the cornerstone of my investment behavior since I was 19. At that time I read Ben Graham’s The Intelligent Investor, and the scales fell from my eyes. (Previously, I had been entranced by the stock market, but didn’t have a clue about how to invest.)

Read the book online (FREE !)

Alternatively, you can view each page individually, seperated by Chapters here. If it's too much, the 3 most important Chapters are as below:

  1. Chapter 1 : Investment vs. Speculation : results to be expected by the Intelligent Investor
  2. Chapter 8 : The Investor and market fluctuations
  3. Chapter 20: Margin of safety as the Central Concept

The 3 Bedrock Ideas above are the cornerstone of Warren Buffett's Billions. Watch the Video from my previous post.

Or if you prefer to own the book, you can get from Amazon from the links below.


Anonymous said...

I really like the comic. Wonder where you found it.

Peter Lim said...

I got it from this website :

It's from the book "Warren Buffett, the Illustrated Biography"

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